Half a trillion dollars were wiped out of Chinese markets in a week as restrictions shatter confidence

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Investors sit in front of a board showing stock information at a brokerage house on the first day of trading in China since the Lunar New Year in Hangzhou, Zhejiang Province, China, on February 3, 2020 China Daily via REUTERS

  • Confidence is collapsing amid China’s regulatory crackdowns
  • Hang Seng is down 1.8%, the biggest weekly loss since March 2020
  • CSI300 was down 1.9%; credit markets on the brink
  • Yuan, Hong Kong dollar sold as the box comes out

August 20 (Reuters) – China’s technology stocks fell to new lows on Friday and Hong Kong’s benchmark reached nearly ten months as relentless series of Chinese regulatory crackdowns crushed investor confidence .

More than $ 560 billion in market value has been wiped out of Hong Kong and mainland China trade in a week as funds capitulate to once-favored shares, without knowing which sectors regulators will target.

The Hang Seng (.HSI) fell 1.8% and its weekly fall of 5.8% was the largest since the increase in the pandemic panic in financial markets in March 2020.

Shares in Shanghai also fell, while investors sold corporate risk debt and the Chinese currency. The yuan was on the verge of suffering the biggest weekly loss in two months as investors rushed to safety amid global coronavirus concerns.

U.S.-listed shares of technology-related companies in the U.S. gained ground as bargain hunters took advantage of recent sales stemming from Beijing’s ongoing regulatory crackdown, which this week has wiped out half a trillion dollars. dollars from Chinese markets. Read more

Alibaba Holding Group, Tencent Music Entertainment Group (TME.N), Didi Global and iQiyi Inc (IQ.O) advanced between 1% and 4.5%.

“There’s not really a trigger, but a lot of elements that are added to the narrative to stay away from China,” said Dave Wang, portfolio manager at Nuvest Capital in Singapore.

“Almost every day you have negative news coming out, so it gives the impression that there is no end in sight.”

Just this week, China announced stricter rules on competition in the technology sector, and summoned executives from real estate developer Evergrande (3333.HK) to warn them to reduce the firm’s massive debt and state media reported that regulations were being enforced for alcoholic beverage manufacturers. managers.

After crackdowns ranging from steelmaking to e-commerce and education, moves are undermining faith in a market that seems to still not find a flat after months of selling. Read more

Shanghai Composite (.SSEC) fell 1.1% to its lowest close in more than two weeks on Friday and blue chips (.CSI300) fell 1.9%, and liquor manufacturers (.SSEC) fell 1.9% on Friday. CSI399997) caused losses.

China Telecom was an infrequent bright spot and rose in its debut in Shanghai. Read more

Investors are pouring into China’s technology stocks

The epicenter of the sale has been the technology sector, which had been popular with foreign investors who now fear they may not be able to quantify regulatory risk and sell them en masse.

Hong Kong’s Hang Seng Tech Index (.HSTECH), made up of many spot estimates, fell 2.5% on Friday to a new record and has fallen about 48% since February.

Shares in Hong Kong (9988.HK) of e-commerce titanium Alibaba fell 2.6% to a record low, halving from the October high. Internet giant Tencent (0700.HK) hit a 14-month low and food distributor Meituan (3690.HK) hit a one-year low.

“Right now there’s a herd mentality,” said Louis Tse, general manager of Hong Kong brokerage Wealthy Securities. “People see a person selling and then do the same.”

As a result, Alibaba now controls its lowest price-to-earnings ratio since it was listed in New York in 2014 and Tencent, the lowest in more than eight years.

“Tencent and Alibaba wouldn’t be trading around twenty profits if the general mood around them was optimistic,” said Tariq Dennison, CEO of GFM Asset Management in Hong Kong, who was actually a buyer on both Fridays.

Added to the regulatory concerns are concerns about China’s economic momentum loss of momentum and rising debt risks, as the data point to a slowdown in demand and factory production and suggest that the authorities are repressing at a delicate time.

The persistence of policymakers with falling hot real estate prices, for example, has markets at the limit and corporate credit fell even further on Friday with news that regulators had reprimanded Evergrande, heavily indebted. Read more

The yuan has fallen in its 200-day moving average against the general growth of the US dollar and has weakened after the psychological mark of 6.5 per dollar, reaching a three-week low of 6,5059 during the land trade on Friday.

The Hong Kong dollar is nearing its weakest level in a year and a half, which also suggests that the money will leave the city.

Reports by Tom Westbrook in Singapore, Alun John in Hong Kong and Samuel Shen in Shanghai; Additional reports from Stephen Culp in New York; Edited by Ana Nicolaci da Costa, Kim Coghill and Nick Zieminski

Our standards: the principles of trust of Thomson Reuters.

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